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Rackspace to Manage Customers’ Microsoft Private Clouds

As it reported solid third-quarter earnings and revenue growth Monday, Rackspace announced another step in moving further away from being viewed as a “commodity cloud” provider. The company said it will now help customers deploy and manage Microsoft private clouds inside its data centers.

It is a competitive offering to Rackspace’s own private cloud services, but it has been painting itself more as a company that provides managed services around cloud deployments than as a cloud infrastructure services company, differentiating from the likes of Amazon Web Services or Microsoft’s Azure public cloud. This means providing as wide a variety of managed services as possible, even if it means adding a competitor’s product as an option.

“As the commodity cloud grew in size and acceptance, and shrunk in cost, the difference between managed clouds and commodity clouds became increasingly apparent,” Jeff DeVerter, general manager of Microsoft Private Cloud at Rackspace, wrote in a blog post. “It was only natural that we take our years of experience supporting Microsoft servers and apply it to managing Microsoft clouds.”

Shares up following strong earnings report

The company’s shares were up nearly 4 percent in afterhours trading Monday following its earnings announcement.

Rackspace reported about $460 million in revenue for the quarter – up 18 percent year over year. Its net income was about $26 million – up from $16 million it reported for the same three-month period last year.

The company reported $0.18 in earnings per share – up from $0.11 for the third quarter of 2013.

Data center spend grows

As its revenue grows, so does its data center and hardware costs. Rackspace spent about $15 million on data center build-outs in the third quarter, compared to about $12 million in the third quarter of 2013.

It spent about $79 million on hardware during the quarter – up from $74 million in Q3 of last year. As of the end of September, Rackspace had more than 110,000 servers deployed in its data centers.

The company leases nearly 60 megawatts of data center capacity, only half of which it was utilizing at the end of the third quarter. It made about $62 million in revenue per megawatt used during the quarter.